Valero logs $1 billion profit in fourth quarter

An abundance of cheap domestic crude, including oil from the Eagle Ford and other booming shale plays, helped San Antonio-based Valero Energy Corp. post a profit of $1 billion in the last three months of 2012 — the company's best quarterly showing since 2005.

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Valero stopped importing light foreign crude oil in the fourth quarter, replacing it with cheaper domestic crude at its refineries on the Gulf Coast and in Memphis. Most of those plants rely partly on crude from the Eagle Ford Shale in South Texas.

Valero CEO Bill Klesse said he expects more U.S. and Canadian crude oils to become available, so Valero is looking at ways to process greater amounts of domestic crude. The company said it enjoyed high margins — the difference between what it pays for crude oil and what it earns from its fuels — in the final quarter of 2012 and for the year.

“There's a lot of crude out there,” said Sam Margolin, an analyst and vice president at Dahlman Rose & Co. LLC in New York, and Valero is well-positioned to capitalize.

The amount of crude coming from the nation's shale plays, including the Eagle Ford Shale, “is definitely changing their world,” Margolin said.

The quarterly results exceeded analysts' estimates, as polled by Bloomberg News, that Valero would earn $1.20 a share in the quarter.

Valero's profit in the fourth quarter climbed to $1 billion from $45 million, or 8 cents a share, in the year-earlier period.

For the year ending Dec. 31, Valero's profit fell slightly to $2.08 billion, compared with profit of $2.09 billion, in 2011. Included in the full-year results were noncash asset impairment losses of $983 million after taxes and an expense of $41 million after taxes, mainly related to the shutdown of the company's Aruba refinery.